Elements of Marketing Mix

The elements of marketing mix are often called the four Ps of marketing.ProductGoods manufactured by organizations for the end-users are called products.Products can be of two types - Tangible Product and Intangible Product (Services)An individual can see, touch and feel tangible products as compared to intangible products.A product in a market place is something which a seller sells to the buyers in exchange ofmoney.PriceThe money which a buyer pays for a product is called as price of the product. The price of aproduct is indirectly proportional to its availability in the market. Lesser its availability, morewould be its price and vice a versa.Retail stores which stock unique products (not available at any other store) quote a higher pricefrom the buyers.PlacePlace refers to the location where the products are available and can be sold or purchased.Buyers can purchase products either from physical markets or from virtual markets. In a physicalmarket, buyers and sellers can physically meet and interact with each other whereas in a virtualmarket buyers and sellers meet through internet.PromotionPromotion refers to the various strategies and ideas implemented by the marketers to make theend - users aware of their brand. Promotion includes various techniques employed to promoteand make a brand popular amongst the masses.Promotion can be through any of the following ways:AdvertisingPrint media, Television, radio are effective ways to entice customers and make them aware of thebrands existence.

Billboards, hoardings, banners installed intelligently at strategic locations like heavy trafficareas, crossings, railway stations, bus stands attract the passing individuals towards a particularbrand.Taglines also increase the recall value of the brand amongst the customers.Word of mouthOne satisfied customer brings ten more customers along with him whereas one dis-satisfiedcustomer takes away ten more customers. Thats the importance of word of mouth. Positive wordof mouth goes a long way in promoting brands amongst the customers.Lately three more Ps have been added to the marketing mix. They are as follows:People - The individuals involved in the sale and purchase of products or services come underpeople.Process - Process includes the various mechanisms and procedures which help the product tofinally reach its target marketPhysical Evidence - With the help of physical evidence, a marketer tries to communicate theUSPs and benefits of a product to the end users

Four Cs of Marketing Mix

Now a day, organizations treat their customers like kings. In the current scenario, the four Cshas thus replaced the four Ps of marketing making it a more customer oriented model. KoichiShimizu in the year 1973 proposed a four Cs classification.

Commodity - (Replaces Products)

Communication - (Replaces Promotion)

Robert F. Lauterborn gave a modernized version of the four Cs model in the year 1993.According to him the four Cs of marketing are:

Consumer Cost Convenience Communication

New product failure

In this era of tight competition from domestic and global firms the firm who don't come out withnew products are putting themselves at great risk because their existing products are prone tochanging customer needs, shorter product life cycles, new technologies and increasedcompetition.Despite years of research and huge capital being pumped in to understanding theconsumer, making a launch successful is still a difficult task. The new product largely dependson the product quality and the marketing tactics of the firm, there are many occasions were theproduct failed miserably even after using the best technology and quality the reason is that thenew product is not worth for the customers. The prime factor for the new product success is customer value. Value is what the customer thinks is value. The major reasons for product failureare1. Faulty product idea The product often fail because faulty of product idea. A good ideacan revolutionize the market but a bad idea may prove bitter to the firm or it may backfireEg: Polar industries in 1991 launched "COOL CATS" fan - decorated with cartooncharacters meant primarily for children. The fan was priced at premium; the idea was thatchildren's were increasingly becoming influensors in purchase decisions and to attract thekids with the cartoon creatures and to position the product exclusively for kids. Theproduct failed miserably inspite of its huge advertising budget because when the fan wasput on it didn't have any colour effect and the customer did not justify its premium price.2. Distribution related problemsThe new product fails if the product is unable to meet thechannel requirements. While developing the product the channel requirements must begiven adequate consideration. Eg: when NESTLE launched its new chocolates theproduct and promotion was ok but the product failed in the distribution side because thecompany stipulated the product to be stored in refrigerators. The product faced twoproblems in the distribution side because it meant excluding a number of retail outlets asthey didn't have this facility and secondly the chocolate was not picked by the customersas it was not seen upfront in the retail shops. Finally Nestle had to reformulate theproduct according to channel requirements.3. Poor timing of launchToo early or lateentry into the market is a common cause of failure. Kinetic Merlin was launched in punein 1991.It was a 3 in 1 set consisting of a colour television, a stereo with detachablespeakers and a home computer. The product was targeted at the Indian consumers whoare fond of sophisticated gadgets to immediately adopt such an innovative idea but inreality the idea was too advanced for the customers to digest at that time because theywere not exposed to such type of products before.3. Improper PositioningPositioning means putting the product into the predetermined orbit.Improper positioning may affect the product success. Eg: Titan Tanishq introduced their18 carat jewellery and the product was positioned at elite segment but there was acontradiction as to why these elite segment should go in for a low carat gold because thenorms for gold in India at that time was 22 carat. The product failed miserably inretrospect Titan had to introduce 22-carat jewellery.Some other reasons for product

Stages Process Steps of New Product Development

The stages or process or steps involved in a new-product development are depicted in the imagegiven below. Click on it to get a zoomed preview.Now let's discuss each stage in the process of a new-product development.

1. Idea generationThe first step in new-product development is idea generation.New ideas can be generated by:Conducting marketing research to find out the consumers' needs and wants.Inviting suggestions from consumers.Inviting suggestions from employees.Brainstorming suggestions for new-product ideas.Searching in different markets viz., national and international markets for new-product ideas.Getting feedback from agents or dealers about services offered by competitors.Studying the new products of the competitors.

2. Idea screeningMost companies have a "Idea Committee." This committee studies all the ideas very carefully.They select the good ideas and reject the bad ideas.Before selecting or rejecting an idea, the following questions are considered or asked:Is it necessary to introduce a new product?Can the existing plant and machinery produce the new product?Can the existing marketing network sell the new product?

When can the new product break even?

If the answers to these questions are positive, then the idea of a new-product development isselected else it is rejected. This step is necessary to avoid product failure.

3. Concept testingConcept testing is done after idea screening. It is different from test marketing.In this stage of concept testing, the company finds out:Whether the consumers understand the product idea or not?Whether the consumers need the new product or not?Whether the consumers will accept the product or not?Here, a small group of consumers is selected. They are given full information about the newproduct. Then they are asked what they feel about the new product. They are asked whether theylike the new product or not. So, concept testing is done to find out the consumers' reactionstowards the new product. If most of the consumers like the product, then business analysis isdone.

4. Business analysisBusiness analysis is a very important step in new-product development. Here, a detailed businessanalysis is done. The company finds out whether the new product is commercially profitable ornot.Under business analysis, the company finds out...Whether the new product is commercially profitable or not?What will be the cost of the new product?Is there any demand for the new product?Whether this demand is regular or seasonal?Are there any competitors of the new product?How the total sales of the new product be?What will be the expenses on advertising, sales promotion, etc.?How much profit the new product will earn?

So, the company studies the new product from the business point of view. If the new product isprofitable, it will be accepted else it will be rejected.

5. Product developmentAt this stage, the company has decided to introduce the new product in the market. It will take allnecessary steps to produce and distribute the new product. The production department will makeplans to produce the product. The marketing department will make plans to distribute theproduct. The finance department will provide the finance for introducing the new product. Theadvertising department will plan the advertisements for the new product. However, all this isdone as a small scale for Test Marketing.

6. Test marketingTest marketing means to introduce the new product on a very small scale in a very small market.If the new product is successful in this market, then it is introduced on a large scale. However, ifthe product fails in the test market, then the company finds out the reasons for its failure. Itmakes necessary changes in the new product and introduces it again in a small market. If the newproduct fails again the company will reject it.Test marketing reduces the risk of large-scale marketing. It is a safety device. It is very timeconsuming. It must be done especially for costly products.

7. CommercializationIf the test marketing is successful, then the company introduces the new product on a large scale,say all over the country. The company makes a large investment in the new product. It producesand distributes the new product on a huge scale. It advertises the new product on the mass medialike TV, Radio, Newspapers and Magazines, etc.

8. Review of market performance

The company must review the marketing performance of the new product.It must answer the following questions:Is the new product accepted by the consumers?Are the demand, sales and profits high?Are the consumers satisfied with the after-sales-service?

Are the middlemen happy with their commission?

Are the marketing staffs happy with their income from the new product?Is the Marketing manager changing the marketing mix according to the changes in theenvironment?Are the competitors introducing a similar new product in the market?The company must continuously monitor the performance of the new product. They must makenecessary changes in their marketing plans and strategies else the product will fail.

Product Life Cycle (PLC)

A new product passes through set of stages known as product life cycle. Product lifecycle applies to both brand and category of products. Its time period vary from product toproduct. Modern product life cycles are becoming shorter and shorter as products in maturestages are being renewed by market segmentation and product differentiation.Companies always attempt to maximize the profit and revenues over the entire life cycle of aproduct. In order to achieving the desired level of profit, the introduction of the new product atthe proper time is crucial. If new product is appealing to consumer and no stiff competition is outthere, company can charge high prices and earn high profits.Stages of Product Life CycleProduct life cycle comprises four stages:

Introduction stageGrowth stageMaturity stageDecline stage

Product Life Cycle (PLC)

Introduction stageProduct is introduced in the market with intention to build a clear identity and heavy promotionis done for maximum awareness. Before actual offering of the product to customers, productpasses through product development, involves prototype and market tests. Companies incur morecosts in this phase and also bear additional cost for distribution. On the other hand, there are a

few customers at this stage, means low sales volume. So, during introductory stage companysprofits shows a negative figure because of huge cost but low sales volume.At introduction stage, the company core focus is on establishing a market and arising demand forthe product. So, the impact on marketing mix is as follows:ProductBranding, Quality level and intellectual property and protections are obtained tostimulate consumers for the entire product category. Product is under more consideration, as firstimpression is the last impression.PriceHigh(skim) pricing is used for making high profits with intention to cover initial cost in ashort period and low pricing is used to penetrate and gain the market share. company choice ofpricing strategy depends on their goals.PlaceDistribution at this stage is usually selective and scattered.PromotionAt introductory stage , promotion is done with intention to build brand awareness.Samples/trials are provided that is fruitful in attracting early adopters and potential customers.Promotional programs are more essential in this phase. It is as much important as to produce theproduct because it positions the product.

Growth StageIn this stage, companys sales and profits starts increasing and competition also begin toincrease. The product becomes well recognized at this stage and some of the buyers repeat thepurchase patterns. During this stage, firms focus on brand preference and gaining market share.It is market acceptance stage. But due to competition, company invest more in advertisement toconvince customers so profits may decline near the end of growth stage.Effect on 4 Ps of marketing is as under:ProductAlong with maintaining the existing quality, new features and improvements in productquality may be done. All this is done to compete and maintain the market share.PricePrice is maintained or may increase as company gets high demand at low competition or itmay be reduced to grasp more customers.DistributionDistribution becomes more significant with the increase demand and acceptability ofproduct. More channels are added for intensive distribution in order to meet increasing demand.On the other hand resellers start getting interested in the product, so trade discounts are alsominimal.PromotionAt growth stage, promotion is increased. When acceptability of product increases,more efforts are made for brand preference and loyalty.

Maturity stageAt maturity stage, brand awareness is strong so sale continues to grow but at a declining rate ascompared to past. At this stage, there are more competitors with the same products. So,companies defend the market share and extending product life cycle, rather than making theprofits, By offering sales promotions to encourage retailer to give more shelf space to the productthan that of competitors. At this stage usually loyal customers make purchases.

Marketing mix decisions include

ProductAt maturity stage, companies add features and modify the product in order to compete in marketand differentiate the product from competition. At this stage, it is best way to get dominance overcompetitors and increase market share.PriceBecause of intense competition, at maturity stage, price is reduced in order to compete. Itattracts the price conscious segment and retain the customers.DistributionNew channels are added to face intense competition and incentives are offered toretailers to get shelf preference over competitors.PromotionPromotion is done in order to create product differentiation and loyalty. Incentivesare also offered to attract more customers.Decline stageDecline in sales, change in trends and unfavourable economic conditions explain decline stage.At this stage market becomes saturated so sales declines. It may also be due technicalobsolescence or customer taste has been changed.At decline stage company has three options:Maintain the product, Reduce cost and finding new uses of product.Harvest the product by reducing marketing cost and continue offering the product to loyal nicheuntil zero profit.Discontinue the product when theres no profit or a successor is available. Selling out tocompetitors who want to keep the product.At declining stage, marketing mix decisions depends on companys strategy. For example, ifcompany want to harvest, the product will remain same and price will be reduced. In case ofliquidation, supply will be reduced dramatically.

Limitations of Product Life Cycle (PLC)

Product life cycle is criticized that it has no empirical support and it is not fruitful in specialcases. Different products have different properties so their life cycle also vary. It showsthat product life cycle is not best tool to predict the sales. Sometimes managerial decisions affectthe life of products in this case Product Life Cycle is not playing any role. product life cycle isvery fruitful for larger firms and corporations but it is not hundred percent accurate tool topredict the life cycle and sales of products in all the situations.